How To Control Warehouse Shrinkage - Part 2 - Screening Employees

Furniture World MagazinePosted: 6/15/2004
By Dan Bolger

Screening applicants with integrity tests.

Screening applicants so that you only hire people that have the required skills, will stay with you, are drug free and honest is a real challenge. The mistakes we make are very costly... frequently in the thousands of dollars. 40% of all thefts are by employees.

There is also a mine field of potential legal problems waiting for retailers who violate the privacy rights of applicants or who, for instance, unknowingly hire a criminal delivery person who rapes a customer.

The focus on this article is on pre-employment tests that can help you screen candidates for jobs. At one time l didn't believe that a multiple choice test could screen for honesty, drugs, attitude toward productivity, customer service attitudes or general conscientiousness. Now I'm absolutely convinced that all prospective warehouse and delivery employees should be tested for integrity and skills ability because employees who test well in these two areas generally make the most productive workers. Best of all, the cost of testing is low, ranging from fifteen to forty dollars per candidate.

For this article, I reviewed the work of the University of Iowa, Florida Atlantic University, research done by the three leading providers of integrity testing as well as obtaining user comments. The researchers at Iowa conducted a study of more than 40 tests and a half million testees. They reported that the tests can predict and screen out irresponsible and counter-productive behavior that drives bosses crazy, such as: disciplinary problems, disruptiveness on the job, frequent tardiness and excessive absenteeism.

The Florida Atlantic University study was an independent study of employees at convenience stores that had high shrinkage - about 3% of sales. All prospective employees had taken one of two London House tests, but they were not used in the hiring process. The fired worker sample was matched with workers having a similar amount of hours in the same stores under the same supervision and the same theft detection system.

Fifty four employees were terminated for theft by mishandling cash or merchandise, taking merchandise home and cash register shortages. Fired employees had low test scores while the still employed group had passing scores. The London House PSI and SEAI tests had successfully predicted detected employee theft. It is important to note there were no significant differences in the test scores or theft rates between male, female, black, white or Hispanic applicants. In other words, a significant percentage of every demographic category stole from their employers.

Reid Psychological Systems, London House and Stanton/ Pinkerton each note that their tests are in compliance with all federal and state laws prohibiting discrimination on the basis of race, color, religion, age, sex, national origin, disability or record of offenses. Some are available in Spanish and French as well as English.

The tests typically take less than an hour and can be scored with a PC program, faxed to the company or processed by touch tone phone. Some of the services will also provide you with follow-up interview questions to ask. These questions are based on individual test results, and can help you to better qualify your interviewees.

Reid notes that candidates that were rated high risk in their tests were more than 9.5 times more likely to use marijuana at work, 5 times more likely to use alcohol at work, 3.5 times more likely to use cocaine at work, 3 times as likely to take company money without permission and twice as likely to miss paid work time.

The director of personnel of a company with 7 locations throughout the US summed it up best. "Every time we hired a person that failed the testing, rejecting the test results because of a fine interview, the decision came back to haunt us. The test was right, we were wrong."

The bottom line is that you can improve the quality of your employment decision by using integrity and skills tests in combination with interviewing and reference checking. All are important.

Do you believe that taking paper or pens without permission from a place where you work is stealing?

What percentage of the people you know are so honest they wouldn't steal at all?

How often do you blush?

How many people have cheated on their income tax returns?

How easy is it to get away with stealing?

On average, how often during the week do you go to parties?

Daniel Bolger, P.E. provides warehousing, transportation and logistics consulting to clients throughout the USA. Questions on this or other articles by Dan Bolger can be directed to FURNITURE WORLD at dbolger@furninfo.com.

Contributing editor Dan Bolger of The Bolger Group helps companies achieve improved transportation, warehousing and logistics. See many other articles by Dan in the Operations Management article archives on the furninfo.com website. You can send inquiries on any aspect of transportation, warehousing or logistics issues to Dan Bolger care of Furniture World Magazine at dbolger@furninfo.com or call him direct at 740-503-8875.
Read other articles by Dan Bolger